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ETF Specialist

A Rough Year for Natural Gas Attracts the Bottom-Pickers

It may be tempting to try to catch a rebound, but know what you're getting into first.

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With the price of natural gas hitting three-year lows last week, some traders have started trying to bottom-pick. As a result, prices have come off their recent lows as buyers step in and drive prices higher. Those expecting a near-term rebound may be considering  United States Natural Gas (UNG), the oldest and largest futures-based product, as a potential option. With the winter heating season right around the corner, the fund--which has roughly $650 million in assets--has already seen about $100 million in net new assets flood in since Oct. 1, 2015, when prices touched three-year lows.

Given the interest that natural gas has garnered during the past week or so, we thought it would be a good time to spotlight UNG. It is true that the exchange-traded fund offers a cheap and accessible way to speculate on movements in short-term natural gas prices. But, there are important caveats to consider before investing.

John Gabriel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.